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After three solid months of gains, consumer confidence in Florida fell in December by four points to 89, University of Florida (UF) economists report. “The release this month shows a Florida consumer who is still reasonably optimistic about the economy at present but is expecting a decline in their finances and the overall economy over the next year,” says Chris McCarty, director of the survey research center at UF’s Bureau of Economic and Business Research.

The drop in confidence was broad-based, with declines in four of the five components. Expectations about U.S. economic conditions over the next five years fell nine points to 84. Expectations about personal finances a year from now fell seven points to 94. Expectations about national economic conditions over the next year fell six points to 82. Perceptions of personal finances now compared with a year ago fell Read the rest of this entry »

In most parts of the country, the New Year will dawn on a housing market that’s shockingly different from just a year ago. Overzealous speculation, too-lenient lending and aggressive overbuilding have combined to create the type of home-inventory levels and price stagnations that haven’t been felt in the U.S. since the early to mid-1990’s.

In short, the housing market, after a historic run-up in prices, is correcting. While that’s of little concession to current and would-be sellers, it’s not the end of the world either, especially if you don’t need to sell immediately. Economics elsewhere are encouraging. Recession doesn’t appear imminent. Wall Street appears healthy. Unemployment is low, and the general economy is good.

The market, as it always does, will reach equilibrium again, though probably not before mid-2008 or so, most economists estimate. So reset that panic button and sit back to raise a glass to 2007 as a transition year that will bring us one step closer to healthier home sales. In the meantime, take note of how home-buying and home-selling strategies change in a down market.

Here are seven selling tips and seven buying tips for ‘07 that could help save you a little grief in the short term and a lot of money in the long term.

7 selling tips for the down cycle:

• 1. Price to sell. If you really must sell now, don’t mess around. List your house based on what the market dictates today, not the prices that friends, relatives and co-workers got last winter or last spring.
• 2. Consider all credible offers. Holding fast for a better offer might put you in a situation where you’re merely playing catch-up with a moving market. Don’t assume there’ll always be another offer coming down the pike. You may need to come off your price 5 percent in some areas and 10 percent or more in others.
• 3. Offer to proffer. Buyers are requesting all kinds of enticements to spice the pot. Club memberships, prepaid lawn maintenance, moving-expense reimbursements, all appliances included and liberal repair credits are just a few possible throw-ins. Don’t be shocked if you hear, “Throw in that plasma TV and we’ve got a deal.” Consider in advance how far you’ll be willing to go, but draw the line, however, at “first-born child.”
• 4. Catch the wave at the source. Prepare your home for sale at the very earliest point this “spring” (actually early March or even late February), the time when seasonal buying interest is just starting to build.
• 5. Preserve your equity. Until the market stabilizes, refrain from borrowing from home equity (or raiding your 401(k), for that matter) to pay your bills, or for vacations and other purchases.
• 6. Gain in a sell-buy scenario. If you’ll be buying another home at the same time you’re selling your current one, the price reduction on the new one can compensate for the “loss” you’re taking on the old one. If you plan a “move up” to a better neighborhood and are paying 10 percent below list after selling your old home for 10 percent below list, your net dollar savings will actually be more.
• 7. Stay if possible. If you’re happy in your home and are meeting your expenses but want to sell due to continuing “housing bubble” fears, sit a spell. A home is a shelter first, and investment second. Except for a handful of markets that are still hyper-inflated, odds are that it will pay to ride out the storm. Generally, the early stages of a downturn are the scariest because that’s when amateur investors are dumping “spec” properties cheaply. 

7 buying tips for the down cycle:

• 1. Negotiate with builders. Don’t be afraid to ask builders for concessions such as steep price discounts, closing-cost waivers, luxury upgrades, free landscaping, free trips and free club memberships. Many builder-incentive packages are worth 10 grand and up! In some markets such as Boston, new condos are selling for 20 percent less than they were in mid-to-late 2005.
• 2. Negotiate with home sellers. Unlike the go-go market of recent years, offers of 5 percent to 10 percent or more under asking price will not be inappropriate. (See “selling tips” for some of the throw-ins that buyers are being offered.)
• 3. Educated timing. Read up on local – not national – market trends, religiously read for-sale ads, and get a sense of what’s moving and where, then be prepared to jump on bargains, especially as the last of the speculators are being flushed out of the market and for-sale inventories are at their zenith.
• 4. Avoid hot spots. Stay away from buying homes in neighborhoods that appreciated significantly above average home prices in recent years – especially if you’re moving for the short term. Once prices in these hot spots are corrected, these often see slower upward movement or remain flat after the overall market heads north again.
• 5. Modesty is the best policy. Consider more modest homes in well-maintained, established neighborhoods. By contrast, pricing and re-pricing on expensive homes, new homes and new condos make those products riskier during down cycles.
• 6. Flexibility. For maximum flexibility in pouncing on the right deal, get preapproved for your home loan.
• 7. Follow fundamentals. Just because a lender will advance you money to live or build beyond your means doesn’t mean you’re standing on sound fiscal footing. At year-end 2006, $330 billion of adjustable-rate mortgages, or ARMs, were creeping upward. Avoid risky interest-only loans and ARMs, opting for fixed-rate mortgages instead. And learn from the recent past: Don’t assume housing will appreciate enough in the near term to cover your home’s rising interest payments.

© 2007 Bankrate.com

The bull market in commercial real estate made 2006 a record year, and many believe 2007 will be just as good.
“There’s just a lot of cash in the system chasing assets that throw off a yield,” says Michael H. Winer, who manages the Third Avenue Real Estate Value Fund. “As long as the liquidity is there, the prices will hold up.”
Prices for a square foot of office space were up 17.2 percent in 2006 to $218, from $186 in 2005, according to Real Capital Analytics, a New York research firm. Warehouse and industrial space jumped 8 percent to $68 a square foot in 2006 from $63 in 2005. Retail space, such as malls and strip centers, was up 10 percent.
The increases in rents – up 2 percent in the third quarter alone – and the low vacancy rate, 13.5 percent, further supports the idea that 2007 will be rosy.

Source: The Wall Street Journal, Ryan Chittum and Alex Frangos (01/02/07) © Copyright 2007 INFORMATION, INC. Bethesda, MD http://www.floridarealtors.org/NewsAndEvents/n3-010307.cfm

Seeking happiness? An Australian researcher finds that making payments on a mortgage is a good way to feel better. Professor Bob Cummins of Deakin University told the Sydney Morning Herald that his studies of well-being have found that homeowners are more content than renters at all levels of income. Renters tend to be more footloose, Cummins said. Couples also find that holding a mortgage together increases their feeling of commitment. Oddly, events like the Sept. 11, 2001, terrorist attacks in the United States or the Bali nightclub bombing that killed scores of Australian tourists can also increase a feeling of well-being. “All of this created an amazing sense of external threat that Australia had not really had since World War II,” Cummins said. “This kind of threat caused people to bond much better.” But there’s nothing like a mortgage, especially for couples. “They have a clear investment in their combined future. People who rent have not made that kind of mutual commitment,” Cummins said.
Copyright © 2006 by United Press International
 

Charlotte County home sellers may have finally learned that the boom market is over — at least for now.

Supply and demand seem to be finding a new equilibrium in the Punta Gorda metropolitan statistical area, which also includes all of unincorporated Charlotte County, according to October existing-home sales figures released Tuesday by the Florida Association of Realtors.

Across nearly all Florida markets this year, housing inventory has piled up as potential sellers listed their houses at the high prices prevailing in 2005. But with more choices available, potential buyers have been able to shop for bargains, while leaving overpriced houses to sit on the market month after month. Read the rest of this entry »

Cities are struggling to adequately meet the housing needs of lower-income working families, those with disabilities, people in transition, and immigrant families. At the same time, three-fourths of local housing officials report that the spiraling cost of housing is significantly limiting the opportunities for homeownership for lower-income people and younger families. These findings are part of the State of America’s Cities Survey on Municipal Housing, released today by the National League of Cities (NLC) at its Congress of Cities conference, in Reno, NV.

The NLC survey found that securing safe and affordable housing is becoming more difficult for many cities, with one-third reporting that the availability of affordable housing has worsened in the past year.  Among the most significant challenges facing cities are the increasing number of foreclosures, need for home repairs among elderly and low-income families, deteriorating housing stock, absentee landlords and vacant and abandoned properties. In addition, one-third of local housing officials have seen predatory lending on the increase, with more than half indicating it is a problem in their city.

“Ensuring an adequate housing stock is just one of the major obstacles faced by cities in this decade but all the obstacles are linked together,” said Cynthia McCollum, second vice president of NLC and a council member from Madison, Ala, a suburb of Huntsville. “We are facing increasing numbers of older residents, more fiscal challenges, problems with crumbling infrastructure and a changing economic climate. We must work together to keep our cities strong, because without strong cities – large and small – our quality of life will diminish.”

Funding for city housing programs comes from a critical mix of government and non-governmental sources: 84 percent of cities receive some federal assistance, 72 percent state assistance, and 52 percent fund housing programs directly from city resources. About three out of four housing officials, however, reported that the federal and state governments are not doing enough. Read the rest of this entry »

Brevard County’s housing market continued to be in the doldrums in November, according to the latest statistics from the Home Builders & Contractors Association of Brevard.

The number of housing construction permits issued countywide in November was 235, down from 613 permits in November 2005 and down from a short-lived increase of 512 permits in October of this year.

Of the 235 permits issued last month, 201 were for single-family homes — the lowest number for single-family construction for any month this year. The 201 single-family permits in November were down significantly from earlier this year, when more than 400 single-family home permits were being issued each month.

“It’s been pretty serious. It’s going to get a little bit more serious before it gets better,” said Franck Kaiser, the association’s chief executive officer. Read the rest of this entry »

Happy Holidays to all of our Loyal Readers!

Buyers and sellers are waiting for the other to blink: The housing slowdown isn’t giving buyers the big bargains that they might have hoped; and where there are discounts, buyers aren’t leaping to grab them, says Karl E. Case, an economics professor at Wellesley College, who specializes in real estate. Case says the most recent survey he and a colleague conducted among homebuyers revealed growing pessimism about buying in a down market. “They’re scared they’re going to buy something very expensive that’s going to fall in value,” he says. Sellers, meanwhile, are being “stubborn. They seem to be holding out so far.” The result: “People are staring each other down.” Case described home prices as having “downward stickiness,” meaning they don’t fall nearly as much as they rise during the strong periods. In previous down periods, Case points out, the economy has been in a general slump. This time, in most parts of the country, the economy is growing and adding jobs. Case concludes the housing market is in “that flat period, of four to six quarters, where prices don’t plummet. They hold on.”

Source: The Boston Globe, Andrew Caffrey
© Copyright 2006 INFORMATION, INC. Bethesda, MD

WASHINGTON, D.C. December 22nd, 2006 — A new tax deduction will make homes more affordable next year by allowing many American home buyers to write-off premiums for private and government mortgage insurance.

The deduction, which will help families who can’t afford the traditional 20 percent down payment for a home mortgage, will be effective for the 2007 tax year. Borrowers closing loans to purchase homes in 2007 who have annual household incomes of $100,000 or less will be able to get a low down payment mortgage and deduct the full cost of their mortgage insurance premiums on their federal tax return.

“We are pleased that policymakers have recognized mortgage insurance as a cost of finance just like mortgage interest,” said MICA Executive Vice President Suzanne Hutchinson. “Mortgage insurance plays a crucial role in maintaining the stability and continued health of the mortgage finance system. In today’s climate of steadily rising interest rates and slowing home price appreciation, an insured loan is often the most borrower-friendly alternative.”

Read the rest of this entry »

It ends with a whimper: The 2006 hurricane season concludes today with nary a single hurricane making landfall, a feat not repeated since 2001 and only the 11th time on record. Most forecasters offered explanations on why their forecasts fell short since most predicted an above-average hurricane season last spring; at the same time, they’re reminding residents that 2007 could see a reemergence of the destructive storms. “This year was a break, not a shift,” says research meteorologist Stanley Goldenberg with the National Oceanic and Atmospheric Administration. “We still see all the oceanic and atmospheric signals that we’re in an above-average era. But, even in an active cycle, you have slow years.” Still, even with skyrocketing insurance costs and the possibility that next year could be worse, most Floridians breathe a sigh of relief today.

Ah, prognostication. It’s a time-honored profession and one that’s hard to beat in terms of job security. In what other profession can you get it wrong half the time and still be considered pretty good at what you do? If “Bob in accounting” had that kind of track record, he’d be out on the street before the second-quarter earnings were revised. But prognosticators can’t possibly be faulted for not knowing what hasn’t happened yet.

All of this is a fitting introduction to our forecast of the changing real estate market in the U.S. over the next few years — 10 markets where housing prices and values will continue to remain strong (below), 10 markets where appreciation will pretty much top out and the 10 markets that are most likely to experience a decline. We talked to experts, studied public and private databases, analyzed market trends and examined the analyses of many others — often contradictory.
The resulting lists are not intended to be numerical rankings, which would result in lists of markets located almost exclusively in California and Florida.

Nor are they intended to be be-all, end-all lists. In a recent quarterly metro-area, single-family home price report from the National Association of Realtors, a record 72 markets had annual increases in the double digits for median prices for existing, single-family homes. Only six areas had price declines out of 145 metropolitan Read the rest of this entry »